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Jonathan Simkus, On Behalf of Himself and the Classes Described Herein v. Cavalry Portfolio Services

May 22, 2012


The opinion of the court was delivered by: Marvin E. Aspen, District Judge:


Plaintiff Jonathan Simkus ("Simkus") filed a three-count class action complaint against Defendants Cavalry Portfolio Services, LLC and Cavalry Investments, LLC (collectively, "CPS"), seeking monetary damages under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"), and the Illinois Collection Agency Act, 225 ILCS 425/9 ("ICAA"), as well as declaratory and injunctive relief. Presently before us is CPS's motion to dismiss all counts for failure to state a claim. For the reasons set forth below, we deny CPS's motion.


Under the federal regulation entitled "Uniform Retail Credit Classification and Account Management Policy," a bank is required to charge-off a credit card receivable after it has been delinquent 180 days, thereby removing it from the bank's books as an asset. Notices Federal Financial Institutions Examination Council, Uniform Retail Credit Classification and Account Management Policy, 65 Fed. Reg. 36903-01 (June 12, 2000). (Compl. ¶ 44.) In early 2009, Bank of America charged-off a debt incurred by Simkus for personal, family, or household purposes. (Id. ¶¶ 18--19.) Under applicable regulations, Bank of America was required to send periodic statements to Simkus until it deemed that the account was "uncollectible, or if delinquency collection proceedings [had] been instituted." 12 C.F.R. § 226.5(b)(2)(I) (effective until Feb. 21, 2010).*fn1 (Compl. ¶ 47.) The term "uncollectible" was not defined in the regulations; however, after charging-off Simkus's debt, Bank of America did not send any billing statements regarding the account. (Id. ¶ 31.)

On or about December 9, 2010, Capital Management Services, L.P., on behalf of Bank of America, sent Simkus a request for debt in the amount of $7,077.66. (Id. ¶ 17 & Ex. A.) In May of 2011, Bank of America reported to Trans Union that the high balance of the debt was $7,077. (Compl. ¶ 25 & Ex. C.) Shortly after, Bank of America sold the debt, in the amount of $7,078, to CPS. (Compl. ¶ 33 & Ex. C.) On June 13, 2011, CPS sent a letter to Simkus, informing him that CPS had purchased the debt and requesting repayment in the amount of $10,828.28. (Compl. ¶ 25 & Ex. B.) After receiving this notice, in a letter dated June 29, 2011, Simkus informed CPS that he was not aware of the account number on record and requested that CPS send him any and all information related to the alleged debt. (Compl. ¶¶ 36--37 & Ex. D.) Prior to issuing a response, CPS reported to Trans Union, in August of 2011, that the amount of Simkus's debt was $11,192. (Compl. ¶ 26 & Ex. C.) Finally, on September 2, 2011, CPS responded to Simkus's request and reported the debt as $11,220.79 but did not provide the original Bank of America account number. (Compl. ¶ 38--39 & Ex. E.) Simkus consulted counsel and obtained his credit report to verify that the debt reported by CPS was the same debt originally owned by Bank of America. (Compl. ¶ 40 & Exs. A, B.)

Simkus alleges that Bank of America did not charge interest after charging-off the debt (Compl. ¶ 30); however, CPS retroactively added interest for the period of time between the charge-off by Bank of America and CPS's purchase of the account. (Id. ¶¶ 29, 50.) Simkus claims that this addition of interest is prohibited under FDCPA and ICAA because Bank of America waived all further interest charges on the account after its charge-off, and CPS does not have the right to retroactively reverse the decision of Bank of America. (Id. ¶ 34, 51.) Simkus filed his putative class action complaint ("Complaint") in the Northern District of Illinois, seeking redress from unlawful credit and collection practices engaged in by CPS, namely that CPS added unauthorized interest to debts they purchased. (Compl. ¶ 1.) CPS in turn filed the pending motion to dismiss all claims in the Complaint. (Mot. at 1.)


A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) is meant to test the sufficiency of the complaint, not to decide the merits of the case. Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). In evaluating a motion to dismiss, we must accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Cole v. Milwaukee Area Tech. Coll. Dist., 634 F.3d 901, 903 (7th Cir. 2011); Thompson v. Ill. Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002). Pursuant to Federal Rule of Civil Procedure Rule 8(a)(2), a complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Accordingly, a court may grant a motion to dismiss under Rule 12(b)(6) only if a complaint lacks "enough facts to state a claim for relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1974 (2007); see Ashcroft v. Iqbal, 556 U.S. 662, --, 129 S. Ct. 1937, 1949--50 (2009) (extending Twombly from anti-trust to litigation generally and stating that a court's determination "whether a complaint states a plausible claim for relief will . . . be a context-specific task"); Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010); Killingsworth v. HSBC Bank Nev., N.A., 507 F.3d 614, 618--19 (7th Cir. 2007); EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776--77 (7th Cir. 2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949.

Although a facially plausible complaint need not give "detailed factual allegations," it must allege facts sufficient "to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S. Ct. at 1964--65. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 129 S. Ct. at 1949; Twombly, 550 U.S. at 555, 127 S. Ct. at 1964--65 (holding that a sufficient complaint must provide more than "labels and conclusions, and a formulaic recitation of the elements of a cause of action"); Killingsworth,507 F.3d at 618--19. These requirements ensure that the defendant receives "fair notice of what the . . . claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555, 127 S. Ct. at 1964 (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 102 (1957)); see also Fed. R. Civ. P. 8(a).


A. FDCPA and ICAA Claims

In his first two claims for relief, Simkus alleges violations of both FDCPA and ICAA for CPS's addition of unauthorized interest to his debt.*fn2

Under FDCPA, Simkus claims that this practice is both a deceptive collection practice and an unfair collection practice under 15 U.S.C. § 1692e and §1692f. Section 1692e regarding deceptive collection practices provides:

A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the ...

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